Economist: At least 2 more painful years ahead

If you don't like the pace of the state's economic recovery so far, get ready for more of the same for at least the next two years.

Michael Walden, an economic forecaster at N.C. State University, said the economy will continue its painful slog as long as households remain frugal and in a saving mode.

"We're not seeing a fast bounce-back," Walden said. "There's no one out there who's seeing 6 percent or 5 percent unemployment anytime soon."

Walden issued his twice-yearly economic forecast today. He said his projections match the lackluster economic forecasts of government economists at the Federal Reserve and private economists at Wells Fargo.

For example, Walden projects the statewide jobless rate to be 9.4 percent at the end of next year, which is virtually unchanged form the most recent monthly rate of 9.6 percent as measured in October. At the end of two years, Walden predicts unemployment will have dipped to 8.9 percent.

Another major drag on the economy is declining housing prices, which are expected to continue slumping through next year. When real-estate values are in the dumps, people own less wealth and as a result they are less are likely to resume pre-recession shopping habits. Most economists believe that robust consumer spending is essential for an economic recovery.

Housing values nationwide are down about 30 percent since the recession. The consumer spending sprees and related credit-card debt accumulated over the past two decades was driven by public confidence bouyed by rising stock values and rising real-estate values.

Consumer confidence has plummeted as American households lost an astounding $16 trillion at the nadir of the recession.

Over the next two years, Walden predicts the state will gain a paltry 125,000 jobs. That's nowhere near the amount needed to offset the loss of 300,000 jobs wiped out during the recession.

North Carolina has gained just 9,400 nonfarm jobs this year through October, according to the N.C. Employment Security Commission.

The recession was declared over in June 2009, but it didn't end in this state until the first quarter of 2010.